1. readily available and as coca cola requires

 

1.     
Potential of new entrants into the
industry:

The
potential of new entrants is high as beverage industry requires a large level
of investments, marketing, and product development and to compete with the existing
brands like Coca cola and Pepsi which has a strong brand image and huge loyal
customer base. The ability of existing brands to ensure same product taste and
excellent customer service has made further raised the entry barriers to this
industry. Following could be hurdles for new entrants

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§  Huge investment and marketing

§  Loyalty of customer with coca cola

§  Huge distribution area and channels

§  Enormous  bottling network

 

 

2.      Power of suppliers:

The
raw material of coca cola includes color, caffeine, sugar, etc. The main raw
material required is flavor syrup which coca cola produce by itself so other
raw material required is very common and there is large number of suppliers of
these commodities. So these suppliers have no bargaining power because these
commodities are readily available and as coca cola requires them in bulk
quantity every supplier is readily available to provide them raw material. Due
to lack of product differentiation, the suppliers do not hold a strong position
and bargaining power in front of Coca cola and thus cannot raise prices
according to their wish. Thus the supplier has very low bargaining power.

 

3.     
Power of customers:

Beverage
industry comprises of corporate buyers as well as individual buyers. The main
buyers of coca cola are fast food industry, restaurants, catering services,
super marts. They have a high bargaining power because they buy in bulks. These
customers have different level of bargaining power. Fast food industry has
bargaining level because they are the main customers. The shop keeper and
retailers do not have a bargaining power because they buy in less quantity so
they could not have great profits. Therefore it can be stated that the
bargaining power of buyers is moderate

4.      Threat of substitute products:

Beverage
industry have many substitutes such as juices, energy drinks, tea, coffee, etc.
as there is a lot of awareness about health issues people are now trying to
have healthy drinks but still these substitutes need huge advertising , brand
loyalty and make sure people are changing their choices. As it need huge
advertising and marketing cost it is difficult to give tough completion to
existing players like coca cola. Coca cola spends huge amount of money on
advertisement and marketing campaign to create brand equity and to increase
loyal customers.

 

5.     
Competition in the industry

The
intensity of competition in the beverage market is moderate. The main
competitor is Pepsi while other manufacturers of soft drinks and juices have a
lower market share. Because they are small scale industries and do not have a
potential to affect the market share of coca cola, as it requires a huge
advertisement and marketing. Coca cola is one of the biggest companies in the
world to hold the market share. Coca cola has a well-established brand name and
loyal customers which could be easily affected by other competitors

§  Biggest competitor

 

      The beverage
industry is well known as duopoly with Pepsi and coca cola competing each
other. Both of them have the majority market share while the rest have a little
market share. Coca cola and Pepsi are giving though time to each other on the
basis of advertisement and marketing strategies instead of pricing.

These both are the main players because local markets like
gourment cola and other have no effect on their sales.

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